Book 1 Page 168 12-04-2019 9:00 a.m. MINUTES OF THE CITY OF SARASOTA FIREFIGHTERS PENSION PLAN BOARD OF TRUSTEES REGULARI MEETING OF DECEMBER 4, 2019 Present: Chair Michael Hartley, Vice Chair Shelia Roberson, Secretary/Treasurer Shayla Griggs, Trustee Charles Joseph and Trustee Scott Snow Others: Attorney Pedro Herrera, Pension Plans Administrator Debra Martin, and Senior Pension Analyst Anthony Ferrer Absent: None 1. CALLI THE MEETING TO ORDER: Chair Hartley called the meeting to order at 9:00 a.m. 2. PLEDGE OF CIVILITY: Chair Hartley read into the record a memorandum from Mayor Willie Charles Shaw, dated February 13, 2015, entitled "City Commission and Advisory Board Meeting Protocols and Pledge of Civility." 3. PUBLICINPUT None 4. APPROVAL OF MINUTES: 4.1. Approval Re: Minutes of the Firefighters' Pension Plan Board of Trustees Regular Meeting of October 23, 2019. Ar motion was made by Trustee Snow and seconded by Trustee Joseph to approve the Minutes of the Firefighters' Pension Plan Board of Trustees Regular Meeting of October 23, 2019. Motion carried unanimously (5-0). Attorney Herrera entered Chambers at 9:05 a.m. 5. INVESTMENT PERFORMANCE REVIEW: 5.1. Presentation and Discussion Re: UBS Trumbull Property Fund Performance Review as of September 30, 2019 Presenter(s): Ronald Lanier, Managing Director, UBS Realty Investors, LLC Mr. Lanier came before the Board and introduced himself. Mr. Lanier noted that the Plan is invested in two funds, one has had a good year and the other one has, for the first time in ten years, shown a negative return. Market value of the TPF as of September 30, 2019 of $16,208.000.00, performance down slightly at -0.46% for the year; since inception in June 30, 2006, up 6.03% versus the Barclays Aggravate at 4.57%. Mr. Lanier added the market value of the TPI, as of September 30, 2019 of $3,726,000.00; performance of 6.72% for the Fiscal Year; since inception in October 1, 2014, the Fund is up 7.99% versus the Barclays Aggravate at 3.38%. Mr. Lanier gave a brief overview of diversifications of the Fund, risk analysis and full market cycle total returs. Mr. Lanier explained the second quarter write down; there was significant depreciation of -4.8% versus the NFI- ODCE at -0.01%; consumer preferences are switching from brick and mortar stores to online shopping and this is impacting the value of the brick and mortar properties; an independent appraisal on the property's value was performed noting various retail properties lack of comparables due to lack of recent transactions as there is little or no capital available for new acquisitions. Vice Chair Roberson posed the question what "Power Centers" are, Mr. Lanier replied they are primarily the big box retailors such as Walmart, Lowes, Home Depot and Costco. Mr. Lanier added moving forward, it is expected that class A+ and A++ regional malls are expected to maintain value better or experience smaller value decreases; leasing went up slightly; income is essentially the same; the pricing has changed in that potential buyers feel the property is worth less with the current high-risk investment in retail. Vice Chair Roberson posed the question if the third-party independent appraiser has changed in the last year, Mr. Lanier replied yes, there is a rotation of appraisers every three years to get a fresh objective perspective on ap periodic basis. Attorney Herrera posed the question if you see other Fund Managers having similar write-downs in the future, Mr. Lanier stated yes, while not many other managers are recognizing this to the extent that UBS believes is warranted. Attorney Herrera posed the question, due to the write-down, is there any fee concession, Mr. Lanier replied yes, and referred to the TPF Fee Program. Mr. Lanier discussed the TPF Fee Program loyalty incentive which is a fee discount; clients may commit to a 3- year period for a 15% fee discount; clients may commit to a 4-year period for a 25% fee discount; investors may decide the portion of the investment allocated to this program; open to clients until December 2020; may leave before the committed period ends after returning the discount dollars received; discounted fee applicable to the current Plan balance of $16.2 million. Discussion ensued. Consensus to add an agenda item to the January 22, 2020 meeting to review the UBS TPF fee Program with Graystone fori its input. Attorney Herrera posed the question, since managers use different matrix's, how as a Board should other managers be approached regarding calculation methodologies, Mr. Lanier stated ask what is the methodology used and why is it that a manager with a lower debt has a higher negative number; a couple of managers do not do debt to market at all; fresh market values should be received every quarter. Mr. Lanier added a representative from UBS attend the NCREIF conference on this issue and he will have that portfolio manager reach out to Attorney Herrera for further discussion. Vice Chair Roberson left Chambers at 10:03 a.m. and returned at 10:08 a.m. Mr. Lanier concluded his presentation with a brief overview of the Trumbull Property Income Fund (TPI). Trustee Joseph posed the question what are the chances of properties other than retail being reevaluated, Mr. Lanier replied all properties are evaluated on a quarterly basis; negative downward projections are not expected Book 1 Page 169 12-04-2019 9:00 a.m. Book 1 Page 170 12-04-2019 9:00 a.m. for other sectors. Mr. Lanier added the investor conference will be held in Los Angeles this year; two representatives from each fund are invited; further details will be provided. The Board thanked Mr. Lanier for his presentation. 6. UNFINISHED BUSINESS: None 7. NEW BUSINESS: 7.1. Presentation and Discussion Re: Impact Statement on lowering the Investment Assumption Rate Presenter(s): Brad Armstrong, Actuary, Gabriel Roeder Smith & Company Mr. Armstrong came before the Board and introduced himself. Mr. Armstrong presented an impact statement on lowering the investment assumption rate; presently using investment return assumption of 6.85%; the Board requested to run supplemental actuarial evaluations at 6.7% and 6.5%; Mr. Armstrong provided a detailed review of the results as outlined in presentation material Item 7.1 Michael Regnier Fire Chief, and FFPP member along with Kimberli Radtke, Director of Financial Management Sarasota County approached the dais and introduced themselves. Mr. Regnier addressed the Board and Mr. Armstrong regarding the share reserve, smoothing and amortization time periods. Chair Hartley replied through the Plan's consultant, volatility has been lowered on the equity side; the expected rate of return has been lowered as the Plan becomes more conservative. Mr. Armstrong replied it is not a reserve rather more specifically a budgetary tool method to moderate contribution rate volatility and amounts. Mr. Armstrong added regarding the amortization period, in 2006 the Plan began a glide path to keep paying off the existing unfunded liability in an orderly matter. Discussion ensued. Chief Regnier asked the Board not to lower the assumed rate for fiscal year 2021; in light of the impact on the County. Chief Regnier asked for an opportunity to rebut should the Board vote on the assumed rate of return. The Board thanked Fire Chief Regnier and Ms. Radtke for their time. Discussion ensued on the time frame of the previous assumed rate of return change; the auditors are here currently, and the information is received in February; GRS can prepare an estimate while awaiting the auditor's report. Trustee Joseph posed the question why gross of fees rather than net of fees, Mr. Armstrong replied it was common in the 90's; the Plan closed in 1996; it is a more conservative approach. Consensus from the Board to add to the January 22, 2020 Agenda further discussion on the assumed rate of return with GRS and Greystone present. Mr. Armstrong added he can present the preliminary results at the January 22, 2020 meeting based on 6.85% and then based on the Board's decision, at final report can be prepared for February 2020. The Board thanked Mr. Armstrong for his presentation. 7.2. Presentation and Discussion Re: Richmond Capital Management Fee Presenter(s): Pedro Herrera, Attorney, Sugarman and Susskind, P.A Attorney Herrera stated a fee concession has been offered by Richmond Capital Management; a corresponding fee addendum to Richmond Capital Management Investment Management agreement will be prepared upon acceptance by the Board. A motion was made by Vice Chair Roberson and seconded by Trustee Joseph to accept the reduced fee schedule from Richmond Capital Management and for Attorney Herrera to draft the fee addendum accordingly. Motion carried unanimously (5-0). Attorney Herrera added the fee concession will be effective January 1, 2020. 8. ATTORNEY MATTERS: Attomey Herrera reviewed the State ethics law regarding Gifts and acceptance of Gifts; any gift regardless of value given to influence decisions on the Board, the gift must be rejected; gifts valued at $25.00 or less it may be accepted and no reporting is required; if a gifti is received at $25.00 or more up to $100.00, there is no reporting requirement of the recipient however there is a reporting requirement on the gift giver to the State Ethics Committee stating the value of the gift and the name of the recipient; gifts valued at $100.00 or more should be rejected or may be donated with appropriate documentation and then file a form with the State Ethics Committee. Attorey Herrera added he would like to present al holiday gift to the Board; it is under $25.00 and there is no reporting requirement; the gifts are golf size umbrellas. Attomey Herrera added the legislative session is beginning; nothing at this point that will affect municipal plans. Chair Hartley posed the question since the Plan is closed, may a letter be written requesting an exemption to the new FRS mortality table participation requirement, Attorney Herrera replied The Division of Retirement will be contacted after discussion with Brad Armstrong at GRS; the request mayi include other clients with closed Plans. Attorney Herrera reviewed upcoming educational opportunities. Chair Hartley asked ift there has been any input from the securities monitoring firms, Attorney Herrera replied quarterly monitoring reports are provided with no significant impact at this time 9. OTHER MATTERS: Secretary/Treasurer: Griggs announced her position as City Auditor and Clerk. Book 1 Page 171 12-04-2019 9:00 a.m. Book 1 Page 172 12-04-2019 9:00 a.m Trustee Joseph, Trustee Snow and Secretary/Treasurer: Griggs added they will be attending FPPTA in 2020. Discussion and consensus from the Board to have representation at the upcoming UBS conference; Trustee Joseph volunteered to represent the Plan. Attorney Herrera recommended a review of the UBS fee reduction proposal at the January 22, 2020 meeting while GRS and Graystone are in attendance. 10. ADJOURN: Chair Hartley adjourned the Firefighters' Pension Plan Board of Trustees Regular Meeting at 11:35 a.m. Sblnalu Chair Michael Harley Vice Chair Shelia Roberson